In Iraq, the 2005 law permits takaful and the Central Bank adopted dedicated rules in 2019, yet no active takaful operator has been confirmed: the planned company jointly owned by Islamic banks still needs to be verified.
The Insurance Diwan, an independent regulator
Iraq's Insurance Diwan is an independent body created by the 2005 law regulating insurance business. It licenses insurers and intermediaries and approves the policies on sale, including those that claim to follow Islamic finance principles.
Law No. 10 of 2005 recognises takaful
Law No. 10 of 2005 expressly lists takaful and retakaful entities among the authorised categories of insurer. Iraqi law therefore gives takaful a legal basis, which sets Iraq apart from several countries in the region that make no mention of it.
Takaful Controls No. 1 of 2019
In 2019 the Central Bank of Iraq adopted Takaful Controls No. 1, drawing on IFSB and AAOIFI standards. These rules work alongside Law No. 43 of 2015 on Islamic banks and govern takaful connected to their business.
A role shared by the Central Bank and the Diwan
The Central Bank regulates takaful linked to Islamic banks, in cooperation with the Insurance Diwan. A policyholder therefore needs to check two levels: the insurer's licence from the Diwan and compliance with the Central Bank's takaful rules.
The 2019 plan for a joint company
In June 2019, the Central Bank announced a takaful company bringing together all Iraqi Islamic banks, with capital of 15 billion dinars, about 12.5 million dollars. Its name and whether it has started trading have not been verified.
A goal of the 2016–2020 strategic plan
The project was the second objective of the Central Bank's 2016–2020 strategic plan for Islamic finance. It aimed to give Islamic bank customers cover consistent with their financing, without having to rely on conventional insurance.
No confirmed active operator to date
A University of Baghdad study published in late 2019 was still recommending the creation of a takaful company, a sign that no operator was then trading. No verified source shows that any takaful insurer is writing policies in Iraq today.
Murabaha financing and insuring the asset
A customer financing a car or a home through an Iraqi Islamic bank will often have to insure the asset. Ask the bank whether it has access to takaful cover, and see our page on takaful credit insurance.
What to check in a conventional policy
Without a confirmed operator, a conventional policy approved by the Diwan is often the only option. Examine penalty clauses and how reserves are invested, and keep cover to real needs, comparing it with the core principles of takaful.
Looking to Jordan and the Gulf
Iraqis who live or work abroad can buy from established operators. Jordan and its three takaful insurers or the Gulf markets offer sharia-compliant life, health and travel contracts suited to expatriate families and frequent travellers.
Pilgrimage and repatriation from Iraq
Iraqi pilgrims travelling to Mecca and the diaspora settled in Europe look for assistance and repatriation cover. These contracts are generally bought in the country of residence or through the licensed organiser of the trip.
Retakaful: a category provided for but little seen
Iraqi law also provides for retakaful entities, which reinsure takaful operators. With no confirmed primary operator, this category remains theoretical, but it would allow a future Iraqi company to pool its large risks under sharia-compliant rules.
Looking for sharia-compliant cover in Iraq
- Ask the Insurance Diwan for the list of licensed insurers and whether any takaful entity is actually trading.
- If you bank with an Islamic bank, ask whether the takaful company announced by the Central Bank in 2019 offers contracts.
- For any takaful offer, obtain the reference to the 2019 Takaful Controls and the sharia committee's written ruling.
- Otherwise, buy the minimum necessary cover from a conventional insurer approved by the Diwan and read the investment clauses.
- For health, life or travel abroad, compare Jordanian or Gulf takaful operators available from your country of residence.
Price elements under Iraqi takaful rules
| Element | Function | Driver of variation |
|---|---|---|
| Tabarru contribution | Finances the policyholders' mutual fund | Nature of the risk and sum insured |
| Wakala management fee | Pays the managing operator | Scale set by the company |
| Mudaraba profit share | Pays for managing investments | Performance of halal assets |
| Underwriting surplus | Possible distribution to participants | Claims experience for the year |
| Retakaful cost | Protects the fund against large claims | Availability of Islamic reinsurers |
Documents to gather for insurance in Iraq
- Iraqi unified national card or passport
- Residence card for an address in Baghdad, Erbil, Basra or elsewhere
- Vehicle registration card issued by the traffic directorate
- Title deed or lease for the home to be insured
- Health questionnaire for life or medical cover
- Murabaha or ijara contract signed with an Iraqi Islamic bank
Points of caution in the Iraqi market
- Presuming an Islamic banks' takaful company is already running, when its name and activity have not been confirmed since the 2019 announcement.
- Signing an offer described as Islamic without checking its approval by the Insurance Diwan, the only body able to approve policies sold in Iraq.
- Mistaking Law No. 43 of 2015 on Islamic banks for an insurance regime: it governs banks, while takaful falls under the 2019 rules.
- Leaving an asset financed by murabaha uninsured for lack of local takaful, when the bank often requires cover throughout the financing term.
Iraqi takaful in questions
Is takaful legal in Iraq?
Yes. Law No. 10 of 2005 regulating insurance business lists takaful and retakaful entities among the categories of insurer. The Central Bank also adopted takaful rules in 2019 based on IFSB and AAOIFI standards.
Is any takaful company trading in Iraq?
This is not confirmed. In 2019 the Central Bank announced a company jointly owned by Islamic banks with 15 billion dinars of capital, but its name and launch have not been verified. Check with the Insurance Diwan before committing.
Who supervises Iraqi insurers?
The Insurance Diwan, an independent body created by the 2005 law, licenses insurers and intermediaries and approves policies. The Central Bank of Iraq works alongside it on takaful linked to Islamic banks, under Takaful Controls No. 1 of 2019.
What should I do if no takaful offer is available?
Limit conventional cover to what you need, particularly cover required by your bank or by regulation. For personal needs abroad, look at Jordanian or Gulf takaful contracts, and ask a sharia committee for guidance on how to proceed.